What changed
RBI issued a Master Circular consolidating all existing instructions on Non-Resident Ordinary Rupee (NRO) accounts into a single document. The circular included a sunset clause, making it valid only until July 1, 2012, after which it would be replaced by an updated version.
What it means for you
Banks must ensure NRO account operations comply with the consolidated instructions, including definitions of NRI and PIO, permissible transactions, and joint account rules. The sunset clause requires banks to stay updated with the next circular after July 1, 2012. This circular does not introduce new rules but simplifies reference for compliance.
What you must do
- Review and update internal NRO account policies to align with the consolidated instructions in this Master Circular.
- Ensure staff are trained on the definitions of NRI and PIO as per FEMA Notification No.5/2000.
- Monitor the sunset date (July 1, 2012) and prepare to implement the replacement circular.
- Verify that all NRO account openings and transactions adhere to the permissible credits/debits listed in the circular.
Who it affects
All Authorised Dealer Category – I banks, Authorised banks handling NRO accounts
What is the sunset clause in this Master Circular?
The circular includes a sunset clause of one year, meaning it will stand withdrawn on July 1, 2012, and be replaced by an updated Master Circular on NRO accounts.
Who is eligible to open an NRO account under this circular?
Any person resident outside India, as per FEMA, can open an NRO account with an authorised dealer or bank for bonafide rupee transactions. However, individuals/entities from Bangladesh or Pakistan require prior RBI approval.
What types of NRO accounts are allowed?
NRO accounts can be opened as current, savings, recurring, or fixed deposit accounts, with interest rates and operational guidelines as per RBI directives.